Former Labor powerbroker Eddie Obeid has been jailed for improperly lobbying a senior bureaucrat to secretly further his family’s business interests.

Obeid looked shocked as he was sentenced to five years with a non-parole period of three years for wilful misconduct in public office.

Justice Robert Beech-Jones described Obeid’s crime as a very serious example of the offence, saying cases of corruption significantly damage the public’s trust in democratic institutions.

“Corruption by elected representatives consumes democracies, it destroys confidence in democratic institutions,” he said. “Given the nature of the offending, not withstanding Mr Obeid’s personal circumstances ... I’m satisfied that no penalty other than imprisonment is appropriate.”

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Beech-Jones said Obeid’s life, had he not committed the offence, could have been remembered as one of considerable public service and hard work.

“Instead his time in public life has produced a very different legacy.”

Obeid will be eligible for parole on 15 December 2019 at the earliest. Immediately after sentencing, Obeid’s defence began arguing an appeal, saying Beech-Jones had misdirected the jury during the June trial.

Obeid’s barrister, Guy Reynolds, SC, attempted to have his client bailed after the sentence, pending appeals against the conviction and sentence. That application was dismissed and Obeid was led to the cells by a group of corrections officers about 1.30pm.

His family, who were emotional following the sentence, did not comment as they left the court.

Obeid was found guilty in June of hiding his family’s financial interests in harbourside cafes at Circular Quay while lobbying a senior bureaucrat to preserve their leases in 2007.

Obeid, then a member of New South Wales’s upper house, was pushing NSW’s maritime authority chief executive Steve Dunn to allow the leases to be automatically renewed without competitive tender in 2008.

Dunn, who is accused of no wrongdoing, was under the impression that Obeid was acting on behalf of his constituents, not to advance the business interests of his family.

A draft commercial leasing policy was later changed to allow the Circular Quay leases to be renewed without competition in the first instance, although the court found Obeid’s actions had not directly influenced the decision.

The crown, during Obeid’s sentencing hearing, argued Obeid was unrepentant and showed remorse only for being caught. Obeid’s defence, led by Braddon Hughes SC, had earlier argued the prosecution were inflating the seriousness of the crime as one more akin to bribery.

Hughes had urged the court to consider Obeid’s 20 years of service to NSW politics, and a range of health issues he suffered, including a recent acute stroke.

His defence argued the 73-year-old should be able to serve his sentence in home detention, due to his short life expectancy. It was argued he would not receive the same level of medical attention in jail.

A large number of character references were handed to the court on his behalf, many praising his honesty, integrity and devotion to public work. But Beech-Jones found the healthcare Obeid would receive in prison was “adequate”, albeit inferior to that available in the community.

Beech-Jones acknowledged Obeid was of prior good character, but said it was of less weight in cases of corruption.

“In cases of corruption... where the need for general deterrence is especially strong, prior good character is to be afforded less weight than it otherwise would,” he said.

Beech-Jones said the “overwhelming majority” of politicians act in what they believe to be in the best interests of their electorate, knowing they could only expect “persistent criticism” of their actions.

The Icac inquiry followed a Fairfax Media investigation that uncovered Obeid’s family’s ownership of the cafes were held through a secretive network of trusts. Obeid’s business dealings had been the subject of three Icac inquiries.

He famously remarked there was a 1%chance of him being charged following the Icac findings.

The NSW government has also moved to strip Obeid of his $120,000 a year parliamentary pension.

The premier, Mike Baird, announced on Thursday that parliament would legislate to ensure any politician convicted of a serious offence – one punishable by five years’ imprisonment or more – loses the entitlement, regardless of when they were convicted.

Previously, only politicians who were charged while still in office were liable to lose their pension.

“The crimes of Eddie Obeid and his cronies are the most serious instance of official corruption we have seen in our lifetimes,” Baird said. “Regardless of political affiliation, any MP who commits a serious offence while in office should face the consequences, and should not be shielded simply because they resign before being charged.”

The NSW government will also seek to be repaid $280,000 in taxpayer funds given to Obeid for legal assistance, money he was entitled to as a former minister.

Obeid was installed in the Legislative Council in 1991, quickly establishing himself as a rightwing factional heavyweight, along with ally Joe Tripodi.

Obeid entered cabinet in 1999, but was dumped by then-premier Bob Carr after adverse findings against him by the NSW parliament’s privileges and ethics committee. He eventually resigned from parliament in 2011.